Deals with benefits
When there's more to a deal than meets the eye, and why the cops are on a deal sheet
Hello Rainmakers,
We’ve provided TWO robust longer reads for you this week, both of which shed some light on some important UK deals.
First, the background to the likely private equity takeover of financial services success story Hargreaves Lansdown.
Our editor on the ground in the South West, Michael Ribbeck, keeps a close eye on the business founded in a spare room in the posh suburb of Clifton.
It’s a story with real sauce and intrigue, and two founders who aren’t short of an opinion, including one calling their successors “useless”.
You can almost imagine Brian Cox adopting a Lancashire accent to play Peter Hargreaves in Succession 2.
Then Alex Turner got the back story behind to a new £2.2m investment by Foresight and Northern Gritstone which read like the premise of the next James Bond movie.
They were both part of our premium subscription Rainmakers package, and we don’t want you to miss out, so please subscribe.
What follows gives you a flavour of what we do, lively coverage of the M&A market, and we’ve got plenty more for you next week.
The first signs of the effects of a vaping clampdown, private equity exits and more evidence of why American trade is still a powerful acquirer.
Have a great weekend.
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Frasers buying luxury business Coggles off THG for £43m was a classic ‘Deals with Benefits” - it wasn’t the business itself, which enigmatic Matt Moulding, the THG founder admitted had outgrown what he could do with it, but the ongoing 3D chess game that is UK retail.
It’s an undoubted feather in the cap for Moulding, who is trying to gain traction for the Ingenuity ecommerce engine and fulfilment operation, which Mike Ashley’s Frasers are dipping into with an operational tie-up for Sports Direct in Australia, as well as flogging protein shakes in UK stores.
But as Dan Coatsworth, investment analyst at Manchester-based investment platform, AJ Bell said it could be about the credit market too: “A lot of people have wondered why Frasers has taken equity stakes in third party retailers in recent years but not made takeover offers. Swapping ideas on best practice, seeking ways to increase distribution of Frasers’ products, and Mike Ashley simply having an eye for a bargain and hoping to make a few quid as investment were among the suggestions. Now we might have another reason.
“Frasers owns stakes in a number of retailers including AO, Boohoo, ASOS, Hugo Boss, Currys and Mulberry. As a major shareholder, it should be able to command an audience with the people running these businesses, and that provides an opportunity to try and sell them its buy now, pay later proposition.”
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You'd never know it, but the firm that provided the crowd safety and security operations tech platform at coronation for King Charles III and the state funeral of Her Majesty Queen Elizabeth II is based in Nottingham.
The city has already been in the news this week, when the media world descended on the Queen of the East Midlands to cover the final General Election Leaders' Debate. But, under the radar, Nottingham-based Halo Solutions is quietly growing into a major player in its field. And that's set to become more and more apparent after it landed further equity funding through the Crowdcube.
Halo Solutions raised a total of £489,610 from 188 equity investors on the Crowdcube trading platform, taking the total number of investors in the company to 220.
Never ones to miss out, venture capital firm Midven, one of Halo’s main investment partners, has also upped its further investment into the tech company to support its global growth and expansion.
Where else can you find Halo's tech being used? Try the Eurovision Song Contest, FIFA World Cup fan zones in Qatar, the Miami F1 Grand Prix, Silverstone’s British Grand Prix and Moto GP. It has also protected fans at some of the UK’s biggest festivals, from Notting Hill Carnival and Glastonbury to the Edinburgh Military Tattoo.
Ones to watch, for sure.
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NorthEdge were cockahoop this week at selling Clearly Drinks, the soft drink business behind brands such as Northumbria Water.
They sold it to listed consumer goods distributor Supreme has bought Clearly Drinks for £15m.
They’ve owned a chunk of the manufacturer of brands including Perfectly Clear, Northumbria Spring and Revolution Waves since 2017, when they backed the management team in a buyout.
We also learned that AIM-listed Supreme has paid five times EBITDA for the Sunderland-based business which is also a contract manufacturer for a number of the world’s largest soft drinks companies.
For the year ended 31 December 2023, Clearly reported (unaudited) revenue of £22.4 million and Adjusted EBITDA of £3.0 million, with further growth anticipated for the year ended 31 December 2024.
Supreme told shareholders in a stock market notice that the deal was completed on a cash-free, debt-free basis and would bring revenue from “non-vape” products to over £100 million (£250 million including the Group’s Vaping division).
Vaping deals are going to be worth keeping an eye on. Expect a real crackdown on vaping, and therefore a scramble to diversify what has been a profitable and unregulated free-for-all.
We also reported this week that vaping company Totally Wicked ended their sponsorship of Blackburn Rovers football club.
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It’s not everyday that you see the Metropolitan Police on a deal sheet.
The Met Police has acquired certain assets and took on 165 staff after it went into administration. Administrators Tim Higgins, Jane Steer and Zelf Hussain were appointed from PwC.
This week Rivus, who got the Met Police contract last March, managing 3,700 response vehicles, making the force its biggest client, taking up 5% of business.
The remaining part of Rivus is rebranding into Pullman.
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If there was any doubt about the superconfidence of American trade buyers, look no further than the deal to acquire the family owned textiles and commodities trading firm Swiscot Group by Vision Linens Global, part of the Westpoint Group, one of the world’s largest textiles companies.
Since buying Blackburn-based Vision in 2019, Westpoint has integrated it into a global operation that spans headquarters locations in New York and Manchester, UK; production facilities in Bahrain and Florida; and sourcing, distribution and logistics offices in the US, UK, Middle East, China, Pakistan, and India.
The popular and well-known Vikas Shah won’t be short of things to do. He’s also a Non-Executive Board Member of the Department for Energy Security and Net Zero (DESNZ) and a Non-Executive Chair of the Audit and Risk Assurance Committee of the Department for Science, Innovation and Technology (DSIT) and an entrepreneur with fingers in many pies.
He’s promised to have a chat with us once the deal has settled down.
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One of the most popular stories on our site last month was the understandably depressing news that the UK's largest food and drink festival was in danger of disappearing for good.
TheBusinessDesk.com reported that Events By B3 Ltd, which ran the annual Yorkshire Dales Food and Drink Festival near Skipton, had ceased trading and was going into liquidation.
The business had been hammered by soaring operating costs and a loss-making event in 2023, when the festival was hard hit by flooding.
Much better news was revealed this week, with our report that food festival organiser Cocker Hoop Creative has stepped in to acquire the Yorkshire event. While it won't be going ahead this July, it should return next summer, again showcasing the best of local and regional food, drink and culinary talent.
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Nothing says West Country quite like clotted cream and dairy farming. And this week traditional family firm Trewithen Dairy was acquired by German giant Ehrmann.
There were no figures released but the fact that the new owners are pumping £20m into the business is a clue to the size of the deal. It will be interesting to see if the family owned business loses its identity when the suits move in.
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Another listed business that has signalled its ambitions is Fintel.
It told the stock market this morning (Friday 28 June) that it’s going to acquire Sharston-based Threesixty Services Limited from the bizarrely branded financial services giant abrdn plc.
The compliance and business support services to over 900 Independent Financial Adviser and Wealth Manager firms was founded in 2002, and was first sold to Big Finance in 2010 when Standard Life bought it, prior to the major insurance group being sold to Aberdeen Asset Management, before its own rebrand to abrdn.
Fintel will definitely be a group worth watching. Previously known as SimplyBiz Group, they acquired financial services rating service Defaqto in 2019 and rebranded the whole group as Fintel as “the next stage of our digital strategy and moves our business from a branded house under SimplyBiz to a house of quality brands under Fintel.”
We’ll put a bid in for an interview about this.
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